Ignore income taxes in this problem The following data perta

Ignore income taxes in this problem.) The following data pertain to an investment proposal: Cost of the investment Annual cost savings Estimated salvage value Life of the project Discount rate $42,000 $12,000 $4,000 5 years 11% Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using table. The net present value of the proposed investment is closest to: (Round discount factor(s) to 3 decimal places, intermediate and final answers to the nearest dollar amount.)

Solution

Present value of annual cost savings 44352 =12000*3.696 Present value of salvage value 2372 =4000*0.593 Total present value of cash flows 46724 Less: Investment 42000 Net present value 4724 Option 1 is correct